Turkish lira rebounds after Qatar pledges $15 billion

The Turkish lira is rebounding after Qatar pledged US$15 billion in investments to help Turkey’s economy

The currency strengthened some 3 percent against the dollar on Aug. 16, trading at around 5.75 per dollar, hours before Turkey’s treasury and finance minister were scheduled to reassure international investors about the economy.

The lira had nosedived in recent weeks, hitting 7.24 last week, amid a diplomatic and trade dispute with the United States.

Washington imposed sanctions and tariffs over the continued detention of an American pastor, while Turkey retaliated with some $500 million of tariffs on some U.S. imports and said it would boycott U.S. electronic goods.

The currency recovered after authorities took steps to help bank liquidity and limit swap transactions.

Turkey in diplomatic attack against US sanctions

Turkey has engaged in a fresh diplomatic attack against the sanctions imposed by the United States with President Recep Tayyip Erdoğan in talks with prominent European and Gulf countries in a bid to seek more support as the Turkish Lira falls rapidly against the U.S. dollar.

Qatar’s Emir Tamim bin Hamad al-Thani paid a snap visit to the Turkish capital on Aug. 15 for talks with Erdoğan after a phone exchange the two men held late Aug. 13.

Bilateral relations and regional developments were discussed in the working lunch that took more than three hours. Turkey’s Treasury and Finance Minister Berat Albayrak also joined the meeting.

The Emir pledged a direct invesment worth $15 billion to Turkey, a presidential source said.

“We attach importance to his visit. This visit, at the same time, is an indicator that Qatar stands with Turkey,” Presidential Spokesman İbrahim Kalın told reporters at a press conference on Aug. 15.

Erdoğan spoke with German Chancellor Angela Merkel in the late afternoon on Aug. 15, after the latter has openly backed Turkey in its row with the U.S. that brought about political and economic sanctions. He will talk to French President Emmanuel Macron on Aug. 16, another European heavyweight.

“All these indicate there is a growing reaction in Europe against Trump administration’s restrictive and punitive economic policies. We are of the opinion that this marks an important point,” Kalın said.

Merkel said on Aug. 13 that Germany benefits from an economically stable neighborhood.

“Germany wants an economically prosperous Turkey. That is in our interests, too,” she said.

“No one … has an interest in an economic destabilization of Turkey, but of course everything must be done so that, for example, an independent central bank can work and so on,” said the German chancellor.

All this diplomatic traffic comes as Turkey’s national currency has lost around 40 percent against the U.S. dollar in recent weeks as a result of U.S. President Donald Trump’s imposition of sanctions against its NATO ally over the continued detention of U.S. pastor Andrew Brunson.

Europe wants strong Turkish economy

European countries have expressed concerns and reactions over Trump’s harsh measures on Turkey on the grounds that it could also hit the global economic structure, particularly Europe, which has extensive economic cooperation with Turkey.

Turkey’s Foreign Minister Mevlüt Çavuşoğlu also hailed the support lent to Turkey in its economic and political row with the U.S. at a press conference in Ankara on Aug 15.

“In fact, all these incidents have opened the world’s eyes. They have seen once again how the current American administration can disrespectfully use its economic power against countries,” Çavuşoğlu said.

“That is why everyone is now trying to find a way to quit using the dollar [in trade],” he added.

European countries who are aware of the fact a strong Turkish economy is to their advantage do not want Turkey to enter an economic crisis, the minister said.

“We will of course continue to exert efforts for diplomatically resolving our problems. But we will not give in against pressure and impositions,” said Çavuşoğlu.

Qatar lends support to Turkey

In a written statement, on the day Emir al-Thani paid a visit to Ankara, Qatar’s Ambassador to Turkey Saleem Mubarak al-Shafi reiterated his country’s support to the Turkish government.

“Just like during the defeated coup attempt in 2016, Qatar is the first country rushing to help its Turkish brothers and we will continue to stand with them,” the ambassador said. Underlining that his country has already expressed that it was ready to assist Turkey in this period, al-Shafi informed that the Qatari people have bought liras worth millions of dollars in direct support to the Turkish economy.

Turkey and Qatar enjoy a unique relationship in the region. Turkey, which has a military base in Qatar, rushed supplies to the Gulf state after Saudi Arabia, the United Arab Emirates, Bahrain and Egypt imposed a boycott in 2017. Qatar is allied with the West.